>> all right. >> steve, thank you very much. been a pleasure having you here. steve forbes. steve liesman will be here tomorrow. >> you didn't need to lean forward. >> i'm leaning forward. >> join us tomorrow. albert einstein was born 133 years ago. welcome to "squawk on the street" live from the big board. melissa lee is off. the morning after an historic day for the markets, what will stocks do forean encore? dow closing above 13,000 the same day nasdaq finished above 3,000. futures look like we might get carry through. 12 points to the upside. europe, as well. we got negative news out of premier wen in china. >> they hammered china last

night. >> down by 2% or more. road map today, we begin five points from 1400 on the s&p. now the ten-year at five-month high yields. bonds confirming what stocks have long been saying. stress test leaves citi as an outlier. management credibility has been damaged. there is a job opening at goldman sachs as he takes to the op-ed of the "new york times" telling why he quit, blaming a toxic environment. managers referred to clients as muppets. morgan stanley to 720. bull-case scenario 960. jim, you were talking about numbers not that far apart yesterday. >> you are are's going to hit 960. $1,000 a share? >> let's start with the markets the morning after their best

one-day performance of the year with the dow closing above 13,000. nasdaq closing above 3,000. will this bring money off the sidelines? we should point out early, gold down 50 bucks. >> one of the things happening, undercurrent yesterday was the blowout of bonds. people just basically said this is it. we just got, i was talking on "mad money," we just got the bell. the bell went off, get out of bonds. he is giving you this little period where he will keep rates low enough, but take action. i thought that's what he was saying. >> duration risk will come back right now. people have to be aware of that. we see the 10 and 30-year at five-month highs. it is so vitally important. that was one of the big take-aways from yesterday. >> we still see a lot of money going into bonds. bernanke didn't issue a statement saying you're wrong putting it into bonds. he is saying, look, this is your

moment. i'm letting you transition from bonds to stocks without losing a lot of money. remarkable discussion he gave us yesterday. >> the vix got below 15. people always say be a little nervous when it gets that low. do you not think we are in a weird period where we should be looking over our shoulder? >> we still should look over our shoulder because there is still oil, china, hard landings back on the table. retail sales don't lie. we are in a moment where the banks are very strong. there's always room to be cautious. i found i was at walgreen today. i saw a vick's humidifier. maybe it's back to what it used to mean, vaporub. maybe there is another meaning for vix. >> is your enthusiasm for stocks

gotten a second wind? >> i want banks as leaders. i made money when banks are leaders. i lost money when the fertilizers are leaders and the machinery companies are leaders. that was the 2008 bad market. this is a market led -- jpmorgan earned 7 bucks, okay? anything is possible. how about a 10 on jpmorgan? >> it's not unusual. there are a lot of headwinds. capital requirements, very positive yesterday from the stress test. stress test working the way they were intended. >> we were so skeptical. geithner slapped me down. he treated my like a muppet. not literally like goldman. >> let's not forget while they may be far safer, having that much capital against certain businesses means they'll be less profitable, plain and simple. less leverage, more capital,

less profitable. >> look at these loan losses. they are minimal. there is a lot of spending going on. bank of america, which i don'tlike. i don't think it's that well run. they've got a lot of houses. maybe houses have gone from something you don't want to be long to be, i've got the houses, come to me. >> like monopoly. >> let's talk citi, ally, suntrust. the second time now citi are are the black sheep of the group. >> he got that giant bonus. you must be good. >> he already made his pay day when he sold his hedge fund for $1 million. >> did you not get the same call i did, which is that citi's, this is citi's breakout moment? citi is in great shape. vikram gets the big bonus. >> i think that was an investor take away. parsons was saying positive

things. to be fair, came in at 4.9% instead of 5%. it's not as though they need to raise more capital, but are being prevented from returning capital, which was part of the story, to your point. >> right. >> metlife complained that the methodology was skewed against investors. fed numbers were generic in tone. >> travelers, the ceo of travelers is a very respectable figure. he has many times said there were other insurers that did not exercise a lot of caution. he never finger pointed because he is a gentleman. the bond portfolios for some of these guys aren't so hot. >> jpmorgan, wells fargo, would you be loading up? >> i went over to stephanie link who is a contributor for cnbc and research director for actions alert charitable trust.

we were blown away. this u.s. bancorp is a charitable trust name. they are the star of the show. if we could get u.s. bancorp, you'll see this is the sleeper u.s. national bank. it used to be the great growth story in the banks. it is a double digit grower with a great balance sheet saying look at me. i'm bank of america with earnings, with controls, bank of america with management. >> just to come back to jpmorgan, watching that stock up 7% after they had more buy back than anticipated, why wasn't that in 2 the stock? 7% move on that, did anybody doubt they weren't pass the stress test or we didn't have on record they were going to do a higher dividend? >> 3:00 shock. no one is positioned. wait a second, i'm short in

jpmorgan. binge owe, right upside the head. you get a surprise announcement. people intraday were positioned poorly. >> let's buy more. >> why is jpmorgan going up? >> that was a big move yesterday. >> it was apple-like. well, nothing is apple-like. there was a sense overall nothing was supposed to happen like this and there are guys putting it out saying everybody knows jpmorgan is better. when jpmorgan comes out in the face of the federal reserve saying we are declaring a declaration of independence from the federal government, we are in charge. bingo! >> do you care it wasn't their fault? >> jamie dimon is great. we've been playing by the rules. we are better. then never say you're going to

jump the gun. i think we discovered they had a runway here. they had a moment. that was after the fed. i thought it was a seminole moment with the bank. >> it may be. with higher yields, may be interesting to watch. how much of the run is already -- jpmorgan was $29 not that long ago. we are $43 now. >> how about the buyback? does that matter? he's sopping up 15 bill? >> of course it does. >> that is a lot of cash. >> it's a big number. >> i think the banks are back. yes! don't look at me like that. hold it. if you're an alien from mars -- >> a former goldman exec blasting goldman saying the atmosphere at the bank was toxic and destructive. he leveled criticism alt

blankfein and gary cohn. "i truly believe this decline in the firm's moral fiber represents the single most serious threat to its long-run survival." >> i went to a lot of the story. he says who he was, how he grew up. i had an unbelievable run in the mid '80s. i don't want to believe the piece is my first reaction. >> somehow his credibility -- >> right. i want lloyd to come on the show here and say let me give you the other side. the fact they will not come on the show and give the other side -- this is like a charlie rose thing -- is part of the reason why this has more credibility. if you met lloyd blankfein and he could say, let me tell you if this is true, we'll look at this. that's not the way it works. judge, not the first time people wanted goldman to come to the camera or microphone. >> i spent about seven months on a documentary a couple of years ago on goldman sachs during the

time the s.e.c. was suing them over the abacas transaction. he committed to an interview and then backed out. i spoke to many, many goldman clients. interestingly, none of them would go on camera. when you sit down and have dinner with them and the like, they all know this. this is not news to them. that the client doesn't come first. goldman say may it differently. it's not news to their clients. one thing i would take issue with in this amazing op-ed is the idea they will lose clients. at this point they haven't. most of the clients i spoke to are fully aware who i goldman plays them. they do business with them because they feel they have to. >> response from goldman today. spokesperson telling us, "we disagree with the views expressed, which we don't think reflect the way we run our business. in our view, we will only be

successful if our clients are successful. this fundamental truth lies at the harlt of how we conduct ourselves." end of the month, greg siewert takes over. >> are they true when it comes to blankfein or larry cohen? >> they wouldn't do hostile bids. >> no. judging on my own reporting, what he says about the change in culture under blankfein is cohen is true. >> in your a position to know that better than anyone. >> not just feel it. based on all the -- >> you they are in the thick of it. they should have said, listen, here is the way we work. if they are really open -- >> they are not open at all. they are extraordinarily smart and very gifted people. we'll see. i will be curious to see what the fallout is, if any, from this out of the the editorial.

amazing he chose to come public this way. >> long-term greedy, never put the interest of the firm ahead of the clients. that's how you make the most money. is this the way you make the most money? no. >> so few people want to come public. i would have interviews with guys who would say, they're great, then off camera, let me tell you what's going on. i don't want to tick them off. goldman sachs is an incredibly powerful institution. >> what do people say offcamera about jamie dimon. >> they like him. >> they like him. they want to do business with jamie dimon. they want him on the phone. >> this whole situation with greg smith at goldman reminds us of a classic hollywood moment, by the way. >> who is coming with me? who is coming with me? who is coming with me?

who is coming with me besides flipper here in this is embarrassing. >> that's not a "it's a wonderful life" scene. >> brings us to today's "squawk on the tweet." imagine being the next high-profile goldman employee to leave the firm. how do you top quitting via "the new york times" op-ed page? s tweet us and we'll get your responses throughout the morning. there is some material there to work with. >> sit here and quit on national tv with people -- sit right here and say, let me give you the skinny. that's how you top it. >> when we come back, the new watch dog. we'll talk live with richard cordray. le you want to hear what he is saying about overseeing the banks. more "squawk on the street" in a moment. 3q we always hear about jobs leaving america.

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some of the stories we are squawking about, mortgage apps down more than 2%. this despite purchase demands rising more than a third

consecutive week. sharply higher petroleum costs. export prices up 0.4%. not only is today albert einstein's 133 birthday, another genius celebrating a milestone. jim cramer whose "mad money" program first aired seven years ago today. >> we turn to an expert at reading trends, jim cramer. >> i brought in a financial heavy-hitter. >> please welcome jim cramer. ♪ with all these things i've done ♪ >> jim cramer! >> then you get him mad. >> this fiery money manager literally rolls up his sleeves to host cnbc's "mad money." >> who is cramer. >> jim cramer. >> you have beautiful eyes. >> i've never seen the president. >> jim cramer and former chairman of the federal reserve

alan greenspan. >> let me guess, i will get my own show. >> in honor of this one, rick santelli is on set. present over here. >> good to see you. >> take a look at this. don't let it fall. only rick santelli can deliver a cake in style. "mad money" baker's union. >> you're a gem. thank you so much. >> happy anniversary, everybody. >> thank you to everybody at cnbc to give us the show, to nbc to give us a chance, to one of the greatest teams in the world that makes me look good every single day. >> jim cramer, ladies and gentlemen. >> seven years of television, quite something. >> we've got plates, we've got forks. i want the piece with your head on it. >> done your way, my friend. it's a humbling thing. love the show from the get-go. the network so supportive. no joke, i got to tell you,

100,000 people make this show look good, including the people who watch it every night. >> you're selling short the enthusiasm, energy and passion you bring to the show every day. you've got big plans for tonight. >> yeah. we are going to go over the magnificent seven, seven best stocks in the last year, best of seven about what companies have done best in the last seven years and then i'll talk about the seven deadly sins. if you play those games, try to find seven stocks, it's not the way to go. be substantive at all times. that's been the hallmark of the show. i lost 25 pounds since the show began. >> you can add more right here. blow out the candle? >> he's in the best shape of his life. >> thank you cnbc, my co-hosts, thank you. more reasons for investors to celebrate cramer imad dash on deck. one more look at futures. don't go away.

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♪ i just want to celebrate another day of living ♪ 6 1/2 minutes before the opening bell. cramer imad dash. a lot to talk about. do you want to do apple first? >> yes. two things i want to talk about. morgan stanley makes it a best idea. wait a second. it wasn't a best idea before? it shows how the stock may have more room to run. we were talking about a piece in the paper how funds are doing everything they can to find a way to own apple when they shouldn't own apple.

telling. >> these are dividend funds. owning a company that doesn't pay a dividend. there is an instance of one bond fund. everybody wants to taste of it because they know how powerful it is. >> the federal reserve said they are going to keep short rates low. this company has so much cash, i've got to tell you,ing being you raise the short rates and you can make a fortune. they are conservative with their cash. it's the greatest story i've seen in my career, greatest stock story. it's not done. it's not done. >> $960 the bull case for morgan stanley based on television and extras like that. >> yes. if it goes the underarmour mobile, the michael kors multiple. >> explain the action around anadarko. >> it was down yesterday. this is the most, after yesterday, this may be the most

undervalued major oil company in the world. the prospects, gulf of mexico off africa, really, if you think oil is going higher, anadarko is right. that's the one. >> reports of a zinca secondary yesterday confirmed today. >> this is remarkable. this is one of the few of this internet era where the lowest price, where you had a chance to make a lot of money here, and this is, by the way, if they can differentiate themselves from facebook, i go on zinga every day. i play words with friends every day. i'm addicted to it. >> you don't pay for it. >> no. i skip the ads. it's very good. i look at the ad in a sense i try to get it off. the ad is in my head. yesterday there were travel ads.

it's not are totally wasted experience for the travel ads. >> opening belfour minutes away. back in a second. ic shift

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you're watching cnbc "squawk on the street" on this wednesday. opening bell about to ring in 60 seconds. with jim cramer. watching citi and jpmorgan. >> citi is barely down. what that says is, i was on the "today" show this morning talking. this is not a moment where citi is going to get clobbered. these banks are doing so well. it's important to remember citi is a black mark versus what we thought, but they should have been bankrupt. rick is here. i'm a vix in motion of what they did with citi. some banks should pay. >> right. >> some banks should pay for their errors because that sends a bad message they should do whatever they want. >> was ally and suntrust sacrificial lambs to give credibility tote test? >> maybe. i think ally is a firm that did

a lot of bad things. i'm not afraid to say this. this is capitalism. some of these guys were bad capitalists. i want toe see them leave. i don't get it. now they are finally getting slapped. now. >> there is the bell. futures industry association ringing the bell here remotely from its conference in boca raton, being florida. over at the nasdaq, minister of european affairs. >> let's hope nokia has a comeback there. that is a big trade in finland. >> people are talking about these levels, most of the 2008 s&p. i find the one even though i know the make-up of the nasdaq has changed, but that's the most monumental one. that cost people so much money. if you ask me, flash crash, nasdaq, maybe they can look and

see, i ought to think about it. >> volume earlier this week would not back that point of view up. >> no. people still in bond funds. i can name a dozen yielders better than bonds. bonds aren't a ponzi scheme because you get your money back, but you can lose a lot of money in bond funds. i don't know if people get that. >> i want to save time for rick hoe is sitting here with us at the desk. let's get to bob pisani and david faber on the floor now. >> there was a lot to buy. >> there are people who played. close based on percentages of buy versus sell for the market on close orders. sometimes if you add the buys versus sells and you get huge numbers, it's a good indication where it's going to go at the close.

there are people who do this. big story, and when they start passing around bond charts, pay attention. we saw today, 2.18% on the ten year. still going up. >> talking five month highs on both of those in terms of yield. >> this issed fed's worst nightmare. we got a little bit of an improving economy. maybe a little inflation. energy inflation is temporary. there are oceans of cash sitting parked in these treasury funds that are dying to get out. as you and i were talking about, what would you rather own a 2% yielding treasury bond or ford corporate at 6% with improving economy? i think most people would rather own that corporate. >> you are taking the ration risk if you own the bond. not in the fund, but own the bond themselves. your point is a good one. we have been seeing extraordinarily strong volumes of money-fixed income.

the issuance has to be there. >> rick santelli,ing welcome to the stock exchange. always good to see you. weigh in here. this is a coiled spring waiting to snap. this whole treasury bond, out of bonds into stocks. when do you think that might happen? >> it's the obvious conversation everybody wants to have. especially with the equity markets with historic highs with reference to the last several plus years. i'm of the frame of mind europe is most likely going to be in a deepening recession. i still believe banks and jim cramer was talking about allied financial. they stole all the government billions. it's kind of a joke as they pass along taxpayers' money. i think there will be head winds to any growth above 2.5% to 3%. you can see a sell-off in bonds. it's far from certain that the sell-off is going to begin a

process one direction straight up in terms of yields. >> i think people are afraid of that cliff-like effect. speaking of inflation, did you see the front page in the "wall street journal." wage hikes going on across asia. good news for the workers over there. i applaud that. still, a major inflation. >> we talked about it as an issue for manufacturers. one of the smaller stories gaining momentum of jobs coming back here or moving somewhere else because you've got 20% wage inflation in places like china. >> did you see the shanghai index? dropped dramatically because the premier came out and said we are not going to relax the curbs on the property markets. same time they said they will go out and allow banks to alacks their lending standards. they are playing it on both ends here. this is a tough game to play right now. >> investors lose in that market.

>> the bottom line is excess capital is being returned from the best banks. did you see the payout ratios? if you look at dividends plus buybacks, near 100%. if if 2 you include the buybacks as well as dividends, that's huge payout ratios. average is less than that. >> jp wants to be around 70%. >> it is a terrific payout. we'll talk more about that later. >> i want to point out, bob, you've been unbelievable during this period. i've been more skeptical. you have been dead right every morning talking about how there is good news bubbling up. i want to congratulate you. you seized this right moment. a lot of people are telling me, maybe he was out on a deep end saying positive things. i wish i were in the deep end. turned out to be the right end. congratulations to you. >> thank you. the debate is what side of the growth story you're on. 8% or above or 8% or below. so far it's looking better towards the 8% and above.

>> i've got to bring rick in here. rick does mention. i know i think the european banks are shorts. there is a lot of problems there. how important is europe still what we do in this country? >> it's huge. i think it's the capital issues. i see opportunity. if the banks in europe aren't going to be able to fund the corporations, maybe there is an advantage for some of the u.s. banks to move into some of that space. i think ultimately, there is going to be negatives. there's going to be positives. i think genrically, let's keep it simple. china, i don't care what frame you want to use, they are probably not going to be as powerful as 12 months ago. that is a minus. europe is a minus. i do think with the stock market up, is it stimulus or subsidy with regard to all the programs the fed has done? equities are the only game in

town. i agree with bob. >> this is really a very interesting moment. when i see those flows going into bond funds, there are people who are still trying to hide. is it a hiding place any more? >> i think it could be. i certainly, personally, would be careful about hanging out in a bond fund. i'd hide out in a five-year bond or corporate bond where i could hold it to maturity if interest rates move on me. if you're in a fund, it's not necessarily going to be a happy ride. when the price of securities goes down, you'll be trapped. >> i think a lot of people don't understand there is a difference between owning a bond and owning a fund. people can lose money in actual bond funds. >> yeah. it could be rather large if you catch it wrong over the next

couple of years. this is a sell-off. >> when is that going to be? it's hard to imagine talking about 2.18 as though it's a record we've never seen before. >> italian bond, spanish bonds what are you thinking? >> when i look at monti and what happened to the political side of italy, it makes sense to me. in this country, we see the political shenanigans going on in election process. monti doesn't want to be a politician. he's going to go in there and do things that will be good for the fiscal situation of italy. then he will move on. i see some bright spots. i don't want to overplay this hand. i think europe, italy, spain and portugal will have issues. >> monti is an academic. people think he will could his work and become a professor one day. i was in milan last week.

>> wish we could have a politician that say they'll do one term and go deep. >> you talk about recession in europe. ecb officials talk about it being mild. we've got industrial production numbers today. how bad do you see it? >> i think it will be worse than mild. rarely do you get bureaucrats or the business class, to be blunt, i think who saw the major headwinds of the credit crisis? who saw subprime? i don't think it's on that level, but i think there will be a generic slowing that will last longer. >> i'm sure china dumped a lot in europe. >> that's another issue. these economies that drive on exports, as they see their customers slowing down, there will be a propensity to blow out the inventory. >> dead right.

>> you said last week, i'm a chart guy. you have a stack of imperical data. >> that's all i did. whether it's tabular listings, graphics, i like to make my own mistakes. >> how about fed reserve reports. st. louis fed is putting out inventory numbers that are startling. paints a positive picture, don't you think? >> i like the federal reserve does great reports. especially san francisco fed, in particular. when it comes to value quantitative easing, give me some value, guys. >> on the table, off the table, likelihood of it happening later this year? >> we'll talk about that on the

"santelli exchange" today. bill gross made a comment i found fascinating. he said there is going to be qe-3 because every time the central banks pull the sugar the stock market goes down. the answer to your question would be yes, except for in eight months we have an election. i think no matter how apolitical people think the fed is, i'm not buying it. they feel the pressure with all other politicians regard to money, balance sheet and some of the programs of the past. >> do you mean they don't want to be the reason an election happens? >> they don't want to have their finger on who gets elected, but don't want to be too sympathetic to one or the other. they are on a tight rope. >> gross said they were being

played. there is a game which we are pawns. the fed's pulling the strings. >> i totally agree. only problem i have is, even though they may be pulling the strings, it is a puppeteer i wouldn't hire. >> gold has given up all the gains made since late january when the fed signalled potential for additional stimulus. >> everybody talks about how crazy gold is. when i was trading gold in the late '70s, early '80s, 1980 they expanded the limits. there were two or three sessions we covered the whole range, $150 range. gold can get crazy. i still think the trend is going to be to go higher. you can see another $150, lower first. >> right. can trade in that range. in the end, they are printing money.

i want a refuge. my favorite currency is gold. i need a refuge from what the heck they are doing over there. >> maybe oil is a proxy. the government says you're a problem because you're too intelligent to know oil is a currency. >> might be good to have speculation. >> if they had a plan, speculators wouldn't be knocking the door down. >> next week i'm going to have a couple of guys on that are in the business of retrofitting cars and coming up with how enthusiastses can change their car to natural gas. i might get my kennedy lincoln and change it to natural gas. >> supply doesn't matter. >> come on! >> i got to get a look at that car. bring that car into the office. you're going to stick around for a while? >> absolutely. >> media mogul barry diller

speaks out about his controversial new venture. get a look at this morning's early movers.

♪ when your chain of supply goes from here to shanghai, that's logistics. ♪ ♪ chips from here, boards from there track it all through the air,

that's logistics. ♪ ♪ clearing customs like that hurry up no time flat that's logistics. ♪ ♪ all new technology ups brings to me, that's logistics. ♪ playing the "magnificent 7" in honor of "mad money." >> steve mcqueen. we look so much alike. there is another guy, yul brenner -- not really.

>> last time intraday on the s&p, june 6, 2008. >> the economy was just going bad. it was one of the greatest shorts of all time. now the economy is just going good. i like the set-up now versus then. that was when we were being led by machinery. led by mosaic, led by potash. talk about the worst leadership imaginable. it was the inflation move of the day. now what's leading us? the banks. the banks that didn't make the stress test are doing okay, too. >> year-to-date, tech and financials basically tied in terms of leadership. >> think about intel now versus then. low multiple stock with 10% growth, great yield, great balance sheet. microsoft, great yield, windows 8, these are remarkable -- these are not the same stocks as last time around. i've got to tell you, that's why there is staying power. >> i still wonder about when

we'll see a change from psychology from ceos. not that they are negative, but they seem unwilling to commit. >> i went with your analysis on "mad money" with the idea, boy, are we ever going to hear from them? the answer is maybe we never do, but look at their numbers. look at dave cody's numbers in honeywell. say, you know what? it's better than what he's saying. i use that as a good example. he continues to blow away the numbers. you see the caterpillar guy, he's very good. what he is saying is look at the numbers. not happy days are here again. >> or maybe read immelt's shareholder level where he says we are in a new era of shareholder volatility. >> ge sells a lot to china. say the president goes harder than just rare earth materials and says we are tired of your steel. do they quote ge and say other guys build nuclear powers? there is a tight rope here.

>> there is. i come back to m&a a lot. there is a real sign of confidence. we have yet to see it. what i'm hearing from the bankers is not overly positive either. deals that have not made it to the finish line because prices have run up a great deal. that speaks to confidence. >> we had richard kinder. i think he is great, kinder morgan. there are stories about goldman sachs being on two sides of that deal. does that story have any impact on board directors? does this article in the op-ed, where does someone say i've got to go with facebook? >> the el paso deal and the delaware court must reading for everybody out there may have an effect on m&a lawyers, but won't have an effect on deal making. >> everything stays the same no matter what. goldman sachs is like, okay,

that's today's story. >> this could be a game-changer, maybe. maybe it fades away immediately. if you're on the board of directors at goldman sachs and you read this, we have a friend in common who says this is a low-key guy he's known for many years. striver. >> not a controversial fellow. >> not at all. if you're a goldman director and you read this op-ed in "the new york times," what do you do? do you wonder? do you think about it? whether or not there is a possibility over time the client will start to move away if they feel they can move away from goldman? >> i think if you're john whitehead, it's the alum news. this is like a college. i think the alum news. >> i think they tried. >> it does bring up our twitter question today. we are asking you, imagine you're the next person at goldman to resign. how do you top quitting through an op-ed in "the new york times"?

i think we've got answers. we'll get them when we come back. "squawk on the street" more ahead. coming up, jim cramer may be celebrating "mad money's" seventh anniversary today. [ artis brown ] america is facing some tough challenges right now.

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time for "six in 60." six stocks in 60 seconds. cliff natural resources. >> i love when you wake up and have a 3% plus yield. well done. >> juniper downgraded at bmo. >> i talk about wins. big loss here. i've given up on it. >> american tower upgraded to overweight. >> cheap man's way to say, "can you hear me now?" this is a tower company to make signals better. >> numbers of bed bath and beyond raised at birk street. >> you go there, see the numbers are higher. >> starbucks raised. >> it doesn't quit. it doesn't stop. has kick like nike. >> finally dell. >> dell continues to try not to

be a pc company. this is antivirus. one day it will click. >> pivoting around something other than pcs? >> exactly. when you talk about pcs, how can you talk about a stock that might hit $600 today? >> very nice. you want to just do one more round on apple today? >> i think this -- how many times have you ever seen a product you can't get because it's loved? no. think about it. trying to figure out productive's got to get. this is a product you can't get. >> what is amazing to me, we were having a discussion about this number, the five, four, five weeks ago? >> i need people divide it by 10. it's a $58 stock. i'm sick of this. give me my telestrator. sorry.

sometimes i have anger management problem. >> as we approach 1400, how much room on the upside? would you be looking at 1425? >> look at jpmorgan, banks, financials underweight, pharmaceutical companies have low multiples. there is a lot of ways to skin the cat. industrials are looking good here. you've got a lot of strong companies. >> tonight on "mad money?" >> the magnificent seven. there is huberous and arrogance as you celebrate your seventh. people want to know what went right the last seven years. i'm trying to make you money tonight. >> very nice. i like the way you threw your papers. i've got to work this telestrator. learn the no pick draw circle draw. i can do that, too. >> we'll see you tonight, big man. congratulations again on seven big years. >> thank you very much. >> more "squawk on the street"

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it's just another way you'll be traveling at the speed of hertz. welcome back to "squawk on the street," fed chairman ben

bernanke addressing the smaller banks in tennessee saying community banks face a narrow range of profitable lending activities because the big banks moved into many of those areas. another thing plaguing the small banks has been frustratingly slow. that slow u.s. recovery constrains the profitable lending opportunities for the small banks. he does say the situation is improving compared to last year. bank profits, losses and capital ratios are all on the upswing. on the issue of regulation, a huge issue. bernanke says the fed is taking steps to gauge cost of regulations on community banks and recognizes they may impose higher costs. he does point out most of the dodd-frank regulations are aimed at the too big to fail problem and apply only to the biggest banks. fed chairman trying to make nice with the community banks who he does need out there for the economy to start lending and lending in greater numbers for the economy to improve, carl.

>> steve, no q and a, it is a pretaped speech? >> right. he didn't make it down to nashville, tennessee. it is a place he does go every year and does try to show the icb and community bankers they are important to the federal reserve. >> thanks, steve. let's get to the road map. bulls charging ahead as stock register their biggest gains this year. dow closing above 13,000 hand in hand with the nasdaq above 3,000. where do we go from here? it is all about the big banks after the test stress results. we are left with four failures. should you be buying any of those on the dip? big day with big names here on "squawk." richard cordray is here to talk wall street and the economy. a favorite exclusive, faber will sit down with gary parr.

let's hit the markets first. dow closing above 13k. s&p knocking on 1400. a couple points away here. tom lee is chief u.s. equity strategist with jpmorgan here. sentiment perhaps pivoting among managers who might be looking at the world in a different way? >> that's right. there is a pervasive improvement. of economic, risky assets indicators. right sectors are rallying. gold is selling off. the rally -- investors are underweight stocks right now. volumes are low. our institutional clients are sitting on their hands. this tells us there is a lot of fuel for this rally. >> something you tracked for years and we follow is underperformance by money managers who need to catch up. where do we stand on this as we come toward the end of the first quarter? >> for the -- it's interesting,

but the active equity managers doing well this year. i spent about a week in boston. most these guys are ahead of their benchmarks. however, it's your macrofunds that are really overweight credit, fixed income, being safety trade are starting to look at equities. maybe net long exposure being too low. market's up almost 10%. you're going to start to see guys make a big shift when the opportunity comes. pullback becomes shallow because of that. >> why does volume not fit this theme? why do outflows not if pitt this theme? >> right. historically volumes lead rallies. weak volumes and the market rallying. it tells people just aren't involved. retails pulled $3 billion out of the equity the last three years, yet the markets doubled. corporates bought almost $1 trillion of stock in the last three years.

that's why the market is up. absolutely retail -- if you look at retail sentiment, the average the last two years is lower than at the bear market bottom in 2003. investors are more bearish than they were in '03. >> retailers coming back to the market would be something we talk about many times and never see, regardless of sentiment. >> it's going to take time. it probably helps good stocks are making new highs. that's helpful. signature blue chips, equity index make new highs. labor market is coming together. seems like conditions for retail to make a big move is coming. >> we are already up 10% less than three months into the year. we made a nice move so far. >> if it's a secular bull, which we are sure it is -- >> pretty sure. is that more sure than a few months ago? if so, why? >> what we saw was a constellation of factors.

you had risk premium today at 50-year highs. another sign of a secular bull. corporate profit share exploding, always a sign of a secular bull market. no sign of recession. yield curve still steep. corporate cash balances super high. s&p in two, three years, something like a two handle is what a secular bull would propel us to. >> here is for retail to get back in. >> you're not making that call? >> not yet. >> not in print. >> at these levels, the market is off to a great start. it's feeling like '09 again. seculars rallying. you look at the next three quarters, financial and tech are the primary drivers in earnings. >> we may have had similar conversation a year ago. then we ran into very difficult going. >> that's right. the mistake we made last year, the yield curves in europe were

flattening or inverting. we were thinking, well, the u.s. economy is strong enough to overcome that. it wasn't. this time europe's yield curves are strengthening. european stress is easing. china is through an easing cycle. you've got an easing cycle tail wind behind you. >> your target for this year end was 1430. >> for the s&p. >> you're not budging on that yet? >> it's obviously low, right? we don't think there is only 30 points between now and year end. we think maybe there is a chance to maybe buy it so you get 100 points upside or raise our targets. something like that. >> we'll see. we are 1 1/2 points away from 1400 today. tom, thanks. >> great to see you. >> tom lee. citigroup trading -- where is it trading? i don't know. as we've been reporting, the federal reserve finding 4-19 banks failed. thank you very much. down 2%.

that list included citigroup, the nation's third largest group. nice to have you here. >> thank you. >> let's start off with citi. they missed by just this much in terms of 4.9% versus 5% capital cushion on the worst stressed scenarios. stocks down, they are not able to return capital. >> correct. as we pointed out, 18-19 banks did pass the test. to your point, three did not get capital allocational approval. i think part of the reason is citi is so global. i think the loss assumptions they use, the fed for some of their international areas were greater than expected. we fully expect citi to reapply as they are permitted to do and will get approval later this year. >> down 2%. is this an opportunity stock at 35 .66? >> we think it's a great opportunity. business is turning around for citi as well as other banks in

the u.s. >> how bad is it for panda? >> this is a negative surprise. he'll weather the storm. he's done a good job turning citi around in this environment. he's overshadowed by jamie dimon and jpmorgan. >> stock up 7%. some would have said wow, didn't realize they had that much in there. does it have more to go? the stock has been on quite a tear. >> it has. the other one was state street. those two banks were able to give back a lot to shareholders, over 100% of earnings in both cases. bank stocks are nowhere near what we think are normal valuations on price-to-book level. first quarter capital markets businesses are quite a bit better than fourth quarter of last year. >> normal, when i hear that

word, be when will things really be normal? we are looking at the stress tests and higher capital levels. profitability is coming down. what is the new normal? >> that is a good question. we have been talking to our clients about in '97 to '06, profitability was around 15% on equity. the new normal is 1% on assets, 10% to 11% on equity. valuations are going to be lower than back then. higher than they are today. >> how material to earnings are fees? how much do you want to see those stick? >> fees are important. the real magic to the banks will be when the yield curve steepens and fed changes its view on short-term interest rates that. will drive revenues through the roof. that is probably 18 months away. that is the biggest impact banks can get. >> let's talk about them. what is a normalized multiple to book even if it is a multiple and/or to earnings? >> 2.4 times book, 3 times

tangible was normal. 1 1/4 times stated book to 1 1/2 tangible, 2 times on earnings basis. they used to trade 15 times, we are looking at 10 to 11 times. >> where are you on jpmorgan for earnings? >> $4.60. earnings are still being inhibited by high credit costs. credit costs have not come back to normal levels yet. jpmorgan is suffering from the putback problems with fannie and freddie. that's costing them about $1 billion, $2 billion a year. >> ten times your estimate on jp doesn't get you that much more here at $43. talking another 3 bucks up. >> earnings estimates will be revised up as we work through the numbers. if we get better strength in the economy, that will help earnings. >> where does european exposure fit, is that gone? it's not the front page

catastrophic concern. last summer was deadly for the banks. so far managed fairly well. they are managing through the process the access to capital markets, that the sovereigns are having success with is a positive for the europeans. >> finally, let's hit bank of america. that stock up actually best performer right now of the big banks up 3.4%. moynihan does not get the applaud jamie dimon does. >> biggest concern through the stress test was bank of america. they were looked at the weakest of all the big banks. they are going to continue to have success. when they can demonstrate higher profitability, they, too, not this year necessarily, but next year could see dividend increase in a buyback. >> gerard cassidy, thank you for joining us. >> what a week. we are pulling out the big names on "squawk." up next none other than former

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stocks to watch about 45 minutes into trading. micron upgraded to market

outperform from what had been market perform at bernstein. united continental earnings estimates lowered due to lower than expected revenue growth and jet fuel prices. crown castle downgraded to neutral. they did cite valuation from that decision. >> take a look at the ten year. talking about yields at 218 earlier this morning. now 222.6. a lot of discussion whether or not the bond market considered the smartest market in the world, are they now following what stocks said over the past couple of months? there is a look at the ten year. we'll talk to santelli about it later. does raise questions about what happens to housing and mortgage rates. >> we've got operation twist still in effect. mortgage rates never have been lower. the fed does seem determined to

keep things fairly low, especially at the farther end of the curve when it comes to that 30-year mortgage in particular. it's interesting. last year everybody came into the year, so many macrofunds came in saying best trade is to short the ten-year. turned out to be the worst trade. on the other side they made money. pimco that did not. yet this year many people said how much lower can it go. where do we hit in terms of a low. >> 180. >> so far those guys have been right. we'll see if it continues. rick's point earlier, he says we can go further out than a five taking that duration risk and wonders whether we'll bounce around, but not to 3%, 3.5%. >> busting out that range between 1.8 and 2.1% was significant. we have a massive rotation out of gold, down almost $50. into the s&p, which is a hair's breath below 1400. we'll see if that holds.

even though there is no volume. we have to remind people, we'll hit 1400 on minimal volume. >> we've seen record low volume days for a year, a couple of days. >> worst of the year. >> something we are seeing volume is back to fixed income is corporate issuance. high yield market. we talked about that. so much money has moved in as they search for yield, even at 218, you're not talking about much money in terms of return for lending your money to the u.s. government for ten years. that surge continues. that's been one bright spot. >> then pull up an intraday of gs if we can look at goldman. wondering what the impact is on the stock after a bruising, brutal op-ed in "the new york times"? greg smithgate as they are calling it. damage, i think, we were down 0.7, now down 0.6. a little more significant.

we'll see if we get close to normal levels again. >> we will. wouldn't anticipate an op-ed like that would have much impact on the stock price. it is one withering criticism. fascinating he decided to make a decision to go public like that with a brutal criticism of this firm. much of it, i have been hearing for quite some time from clients, but importantly, those same clients don't seem to leave goldman sachs. >> right. one of the great paritiy parodi today, why i left the empire. darth vader complained killing isn't the same. he is trying to keep the integrity of the empire. >> we just watched episode six the other day in my household, again. it's all coming back to me. >> s&p -- we are going to do

this. s&p 1399.35. let the countdown begin. >> 1400. all right. let's go to breaking news on crude oil inventories next. we are bringing it back to the banks. jamie dimon forcing the fed's hands after announcing it would hike its dividend and increase buy back to $15 billion. ♪

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the euro hovering above the important 130 level and losing ground with the dollar today. could there be more pain for the euro to come? willie williams is with societe generale in new york. give me the take on the euro. continued issues there. they are doing better in europe. >> yes. >> i think the situation in europe has improved considerably. more importantly, what we are seeing with qe-3 not off the table but pushed further back, we are seeing a rise in u.s. yields. that is seeing the dollar no longer becoming the funding currency of choice. it's rallying against the yen, swiss and euro. >> will it continue? >> i think it will continue. there is a risk that the euro pushes below 130. last week's high of roughly 132.90 should hold.

i like selling the euro with a stop loss above 132.50. we can get as low as 126.50. >> what is the next thing we should be watching out of the ecb, for example, in europe overall to get a gauge where we are going from here? >> the ecb has done most of what they can for the near term. i think a larger part of what's happening is what's going on in china as an example. now that you have more two-way risk in dollar china. a lot of forces pushing the dollar lower are no longer in play. i think there is a chance with the dollar rallying, you start to see the euro give way and start to see people put on shorts against the euro across the board. euro brazil, euro mex, things like that. >> the strength from the dollar, you expect, will continue for quite some time or until we get more talk out of the fed? >> near term, with the s&p breaking 1400, i think we can continue to see more strength in

the dollar over the next month or so. >> all right. willie, we'll leave it there. thank you. >> thank you. >> for more currency trades, catch "money in motion" friday 5:30 eastern. if you want more education about currencies, go to currency class at "money in motion.cnbc.com. >> the encyclopedia britannica will no longer focus on a print version. they've been printing 244 years. the 2010 version weighs 129 pounds, costs about $1,400. they said digital -- can you imagine trying to compete with that model? doing anything for school

involved going to a world book and yearbook praying it was printed and the information was somewhat up-to-date. >> it will be online, as so many. what strikes you on a day like today? >> i'm thrilled we have a follow through from yesterday's up day. was it a one-day event? so far we are seeing a continuing momentum. not super strong, but enough to keep the optimism going. >> leadership in the right area? >> it's nice you've got strong banks leading things. tech is leading apple. >> we talk about volume and lack

thereof. down side volume has been light. it's hard to make a big deal one way or the other. total equity volume has been on a down trend and not improving. it's due to a lot of competition, different products. it shows to me there is a lot of money on the sidelines, if and when the desire to get back into equity happens, it could be a monster move. we try to punch through 1370. we are almost 30 points higher than that. >> exactly. >> does that open up a new fresh ground? how much? >> what it does, most people i've been speaking to, most reports have been expecting a pullback. we had that one 200-point down day. that was it. this changes everyone's expectations to say maybe things we've been looking at to determine the next move aren't going to happen.

this is a sign maybe to start putting money to work here because you may be missing a little bit. >> thank you, warren. hope you enjoy the you this set. >> absolutely. barry diller preparing to take on the major broadcasters after he announces hoping to stream broadcast television to mobile.de advices through this new controversial venture. we'll hear from barry himself in a rare interview next. first, rick santelli is not in chicago. >> i thought i was. i'm looking around, i can't find a corn pit. wolfman is nowhere to be found. we are still going to do the santelli exchange top of the hour. [ leanne ] appliance park has been here since the early 50s.

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welcome back. at the nymex with breaking news on eia oil inventories. crude supplies up by 1.8 million barrels in the past week. that was less than what analysts anticipated. we are looking at crude get a pop off that number. the big surprises come in the refined fuel area. gasoline supplies down by 1.4 million barrels. gasoline supplies down by 1.4 billion barrels in line with

expectations. heating oil and distillate fuel supplies down. we are seeing heating oil getting a nice rally here. na will be more money to power diesel fuel trucks. higher prices at the pump. back to you. >> thanks, sharon. one hour into trading here. 7:33 on the west coast, 10:33 here on wall street. bank of america up almost 59% just this year. on the flip side, metlife, the biggest decliner in the s&p 500 is falling after failing the fed's stress test. they also contest that test. ibm, starbucks and chipotle mexican grill hitting new all-time highs. >> you can see by the last line on that board right there, we are about 1397, a few points

below 1400. last time it hit that level june 6, 2008. the dow added 420 points in the past five days. quick look at breadth today. we talked about volume and how light it's been not just today, all week, all month, all year. decliners slightly leading advancers over at the nyse. at the nasdaq, as well. similar story 13-9 with the decliners outpacing advancers. aereo launches in new york. julia snagged a rare interview with barry diller. >> aereo is moving forward with plans to roll out one market at a time despite lawsuits from all the major broadcasters to stop the internet tv service and countersuit of its own. for 12 buck as month, aereo sells internat access in over 20

local channels, plus ability to save and watch shows later. they circumvents satellite and cable tv providers. one antenna for each subscriber. barry diller who invested in aereo told me his lawyers did extensive due diligence. he's not surprised by the suits, he says he expects to win. we don't have that sound bite. he said he is happy all these broadcasters came together into a consolidated lawsuit of every broadcaster. he expects the suit to be adjudicated fairly soon. he says aereo is a radical idea. >> many people will say, i still

want me espn, i will still subscribe to cable or satellite, but this is a different product. this is more, so to speak, particularly for young people who think paying lots of money for cable, for all cable services doesn't really make sense for their style of life. >> diller tells me he thinks aereo could be good for the broadcasters. it will grow their viewership which will boost advertising, but clearly the broadcasters aren't convinced. we'll have to see what happens. back over to you. >> for a minute i thought barry would mix some d.j. thing, that's why the music was playing. we'll try it later object. thanks. as we are one hour into trading, let's go to chicago for more of the market's latest moves. ira epstein, good morning to you. >> good morning. >> how important are these levels we are sitting at or right below in. >> the 1400 level right now in the s&p is going to be what we

call the tv number. we'll be talking about it all day. just the way we did 13,000 in the dow. the market is not going to give up. it's the magnet. the market will make a run and go through it. do we bring in more volume? >> where does gold find some support today? >> why should gold find support? it's are risk off trade for gold. it's got all the wrong things going for it. you've got a strong dollar, better-looking economy. greece is off the table. spain hasn't come forefront yet. gold sinks back a little bit here. maybe $1600 level. market's under the 200-day moving average. that's not good news for the gold market. >> concerns about portugal haven't gone away. looks like traders today are unwilling to recall that. >> it's not what the market's thinking about. the market is still caught up in the fed test, about the banks. market still looking is there a qe-3? no. it's a good day for the u.s. it's not thinking about what's going on in europe.

>> well said. thanks a lot. >> thank you. >> 15-19 u.s. banks passed the bank stress test yesterday. citigroup the only major firm not to make the cut. then there was jpmorgan announcing a dividend increase ahead of results. dino cose, give me your take on the banking industry. they stressed them hard. how is it looking from your perspective? >> pretty good. the banks have shown they have rebuilt their capital from where they were a couple of years ago. bad news is the concern on equities are under pressure. they are going to stay under pressure. there's a lot of earnings headwinds. you have net interest margins under pressure. you still have legislative efforts like interchange fee, legislation, things like that

that are going to crimp their fees. good news, capital is there. they are robust. that is not an issue. the issue they are going to deal with is how to get earnings back up. how to get equity returns back up to where they were. >> it's hard to do that if you don't lever your balance sheet to an extent you can no longer and you've got to keep capital extents to where basel iii will force you to. >>ing they have been saying this several years historically roes for the banks have been in high single double digits. the last few years they were in the higher double digits. this is something investors have to start to factor in. it will be hard to get the 20% roe. >> do you think the tests were aggressive enough?

>> absolutely. i think people critical haven't looked at the details. these were pretty severe stresses. very severe. i think that that part of the criticism is unfair. the banks have clearly voiced their concerns. the other thing maybe more important is what they are doing now, supervisors are doing is focusing on things they ignored in the middle of the last decade like dividend payments. they are looking more carefully at the outflows to make sure capital isn't depleted out the back door away from where people are looking at. i think there is a change in supervisory focus which is a good thing. again, if you're a bank, you're on the receiving end of this oversight. you may feel it's tougher to generate returns investors want. >> what about risk-taking overall? it would seem that is going to be curtailed for a long time.

>> even supervision cycles are cycles. after 1990/91, supervisors clamp down and over the next decade things got chipped away. now things are getting tightened. the risk taking will be constrained. that's probably three, four, five years before that cycle gets going. >> back to 30 times, 35? >> hopefully we will never see that again. i predict ten years from now we might be sitting here talking about all this risk taking going on in the banking industry. the next couple of years, the oversight will be strong. you are just not going to see those leverage ratios like we saw at lehman, bear and others before the crisis. >> why does that happen? why can't you be consistent over a long period of time in terms

of supervisory role? >> human nature is probably the best answer. over time, what the banks demonstrate, they bring in lots of data and they say look, look at the riskiness of these instruments. over time they overdo it. suddenly those risks blow up. it's a surprise to everybody. in a sense, we should know that will happen. the next crisis in a decade probably will be about emissions trading or something that hasn't been invented. whatever it is. this is the kind of thing we just, human nature cannot predict that. you have market cycles, supervised cycles. >> right now we are in the sweet spot. >> in the safe spot for the taxpayer, pressure for the banks. >> dino, thank you. david is going to sit down with gary parr.

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our next guest has over 30 years of experience doling out strategic advice to financial institutions and to governments, notably he most recently advised greece and it's successfully restructuring. happy to have gary parr. yesterday we talked to prepare for this interview. we suspected we would be talking about the stress test to come instead we found out about them. give me your take what we learned late yesterday. >> you've been covering it well this morning. i think the important part is the u.s. fed has credibility.

any time you tried to analyze a big bank from the outside or inside, it's complicated. to simplify it down to one or two ratios can be misleading. you have to have credibility. my view is the good news is they're credible. they came out affirmative, a difficult stress, but most importantly saying it looks okay. that puts the u.s. ahead of where europe is. >> europe had its own stress test. >> they did not establish credibility. our crisis was three years before theirs, arguably, so they've still got time to catch up. >> they could have looked at our stress test and done a real job. we talked this morning about these stress tests in terms of capital for obvious reasons. we talked to gerard cassidy about return on equity or multiple to book in this new book. dino kos preceded you. should our expectations be

meaningfully different for profitability and employment levels for capacity of the banks? >> yes. i think we are in cyclical and secular. merger activity is slow, underwriting activity is slow. you've got cyclical pressures. what is secular is the normal cycles we are accustomed to 0. there are more changes to financial institutions than been the case in the 1930s. none of us in our careers have seen this much change. fundamentally the capital. layer on top of that all the regulations. it is different than since the 1930s. >> what does it mean? >> it's less risk. you were talking earlier. it's less risk taking, lower returns. you have goldman sachs earned an roe over 30% two years in a row. i don't see that happening again anywhere as far out as i can see. that's a fundamental change, even for the big banks. they can lose three to four

percentage points and not get it back. more fundamentally, we think about strategic advice to companies, a lot of second tier firms trying to be wholesale investment banks or global competitors are out. >> they are just out. >> they are getting pushed out. >> we've seen some closed or being sold. european banks are selling assets here in the united states. you are involved in advising on some of those. >> yes. >> that is going to continue? >> it is. there is still a pressure. the cyclical pressure and secular. a lot of us moving from the banking system to what's called the shadow banking system, alternative asset managers, hedge funds, other trading platforms. there is a shift taking place. there are other ways to do this. notably, whatever the propriety tra trading debts look like on a major bank, it's moving somewhere else. it's not evaporating. >> compensation coming down and

staying down? >> likely. if you look at the major investment banks, a lot of the compensation was funded off the sales and trading side. they were getting an excess return onside. they were getting an excess return on capital. when they ran for many years and said 50% comp ratio was the place to be a lot of it was funded on an excess return on capital. you take that out and it puts real pressure on the comp levels. >> you are an m & a banker focused on financialen institutions for many years. it is lousy. is that going to continue and what's behind that? >> slow. so, yes, i think most of us and i include myself underestimated the caution that would come back into ceo's minds arising primarily out of europe. we knew it was bad, we knew it was difficult, we knew it was uncertainty. but i think a lot of us would say this is even a more adverse

reaction in the some period of time from europe, a little bit from u.s. then we watched for back log, our back log, new assignment, people beginning to study, beginning to consider and a lot of things are falling into place. >> that caution, i still feel it out there when i have conversations with the likes of you and your peers at other banks what stuff you expect might get over the finish line still not there because the ceos -- >> are still cautious. a lot of ceos had a near-death experience within the last few years. that causes you to take a long time to recover and to be robust or feel bold again. and that's understandable. in a number of other industries, there's still caution and notably in the u.s. now, the economy seems stabilized, banking system stabilized but there's an election coming. that usually creates some uncertainty. >> we may not get the steam going here in the second half? >> it could be slow. >> finally, let's end on europe.

you and i have talked a lot about it. we did last year. you correctly foresaw i think in many ways how severe the crisis might become. a lot of that has come out. the hlro has done a lot to stave off a banking liquidity crisis. >> i think you're right, it was about two years ago we were very nervous. today much more optimistic. a number of things have been done. one, the greek solution and plan really worked. and most importantly it shows there is a way to reposition the debt of a country and keep them in the e.u. and an awful lot of people want to keep them together. >> that's going to be the case for the future, getting down to 120% gdp, doesn't seem like a great -- >> the real issue for europe now is still slow economy and a number of countries which are in negative, they would be in a recession if you looked at it country by country and that means the debt actually continues to go up relative to gdp. that's going to create

increasing pressures. so we're not done in europe. but the reason for optimism is to say we've now proven there is a solution. there is a way to get something done without a country having to leave e.u. does that mean it will never happen? i wouldn't say that. it's hard to predict in these uncertain times. six months ago it was perfectly reasonable to sit around and say we don't know if it's possible to have a solution and keep someone in the e.u. and it's been done. that's been done. and liquidity. banking system for europe. they need to have credibility on the capital of their banking system. they have not accomplished that yet. >> gary parr, as always, very much appreciated. >> it's a pleasure. >> when we come back, nike shares hitting an all-time high. we'll break downtown retailer's product demand, their competitive advantage among the march madness in just a few. here's a chance to create jobs in america.

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up 418 points in that time. just had its best day of the year, up 218 and another 21 today. s&p going a little bit negative here. didn't quite catch that intra day, which we haven't done since 2008. we still have the whole afternoon to go. tweet time. former goldman employee greg smith in his op-ed conjuring up memories of this classic hollywood moment. >> who's coming with me? who's coming with me? who's coming with me? who's coming with me besides flipper here? this is embarrassing. >> that is painful to watch. but what a great picture. imagine you are the next high-profile goldman employee to

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"squawk on the tweet," this former goldman executive blasting the firm in the "new york times" op-ed piece. he called the atmosphere of the bank toxic and destructive. how do you top quitting via an op-ed in the "new york times"? >> via an obnoxious bill board in the financial district." and our own jane wells writes in. "i'd make a half-hour youtube video called blankfei ni 2012 to encourage the ugandan army to capture him." nice stuff, jane. if you're just joining us this morning, here's what you might have missed this morning. welcome to hour three of "squawk on the street." here's what's happening so far.

>> the big banks have dramatically changed a lot of what they're doing to increase their capital, lower their risk and are prepared. >> i think history is going to render a very favorable verdict on the way the u.s. authority starting in late 2008, especially the federal reserve, responded to that crisis. >> you look and see that 18 out of 19 banks still have a 5% capital ratio after that really is a confirmation that the industry is really strong. >> there's guys putting it out saying, look, it's everybody knows that jp morgan's better. but when jp morgan comes out in the face of the federal reserve saying we're declaring a declaration of independence from the federal government, we are now in charge, bingo! >> only you can deliver a cake in style. >> you're a gem.

>> happy anniversary, buddy. >> there's the bell. >> he doesn't want to be a politician. he's going to go in there and do things that will be good for the fiscal situation of italy and then he will move on. i see bright spots but i don't want to overplay this hand. i think you're, at least spain and portugal will have issues. >> the right sectors are rallying, gold selling off. investors are underweight in stocks right now. values are really low. institutional clients are sitting on their hands. this tells us there's a lot of fuel for this rally. good morning. a day of milestones with the market with the s&p approaching 1,400. it got almost wp a point of 1,400. we got gold off $50, the ten-year at 2.2. apple on top one against, one of the big winners today, hitting pressure all-time highs after

fresh patarget increases at two firms and expectations of sales for ipad. metlife and citi the big losers. the man in charge of protecting directors, is here. we'll talk with him exclusively about wall street, the economy, banks and more. then is goldman having their own jerry maguire moment, quitting by way of a scathing "new york times" op-ed. we'll tell you more about the employee and why he decided to quit in style. we'll get the word from traders here on the nyc and nike is running all the way to some new highs. their new line of sneakers combined with march madness push this to the winners circle. we'll start with "squawk on the

beat." republican race for the white house taking an interesting turn in the south, rick santorum scoring two strong win, mitt montana coming in third in both states. the call for newt gingrich to end his campaign is becoming stronger. good morning, john. >> good morning, carl. this was the night that rick santorum wanted to have. not only did he win both races beating mitt romney but he prevented newt gingrich from winning. because newt gingrich couldn't win in the deep south, which is his home region, the place where he won in south carolina and georgia, that makes newt gingrich a diminishing force in this race, whether or not he formally pulls out or not. remember, his campaign team had said earlier he needed to win one of those states. but of course that didn't happen. gingrich says he's going to go all the way to tampa. what you're left with, then, is for mitt romney to make a case on delegate math. i just got an e-mail from his political director saying he increased his delegate lead last night, he has twice the

delegates, has over 400 delegates, he's needs 1,144 to be nominated. he's making the case that inevitable. rick santorum is making a message argument. he made that last night in his speech when he said it was time for conservatives to pull together. here's rick santorum last night. >> we will compete everywhere. the time is now for conservatives to pull together. the time is now to make sure, to make sure that we have the best chance to win this election and the best chance to win this election is to nominate a conservative to go up against barack obama. >> rick santorum is going to take to the missouri caucuses this weekend, to illinois next week, which will be a fascinating test. the first one in the midwest in the new situation with newt gingrich diminishing as a force. rick santorum has always wanted a one-on-one match with mitt romney. he may be about to get it. we'll see whether romney can withstand the test and raise his

game, especially in terms of providing a conservative message. >> what makes you think gingrich is any closer to getting out of the race today ? >> i'm not sure he's closer of getting out himself. his deputy said mr. gingrich has been very clear he's going to tampa. didn't sound as if like the campaign staff totally embraced what newt gingrich has said is his intention. so my point is newt gingrich can keep flying around the country, keep making speeches but the attention that he gets from voters, from donors, from the news media gets smaller and smaller if people see that he really doesn't have a realistic chance of winning anywhere. >> he's learned how to live off the land. we'll see how long that lasts. and we'll look to the 20th and see if santorum can do as well

as he has done down state. >> the polls have shown it ought to be mitt romney territory. mitt romney overcame leads that santorum had earlier established in both michigan and ohio, but in this new environment with a little more wind in the sails of rick santorum, we'll see whether romney can do that again. then we go on to places like wisconsin, another test in the midwest and then more favorable territory for mitt romney. march is not a good month geographically for mitt romney. >> thank you, john harwood. >> last week we went to chicago to see his road. now rick santelli is here. it's been great to have you here. we saw you present the cake to cramer. when you were doing your tease, huge round of applause from the traders here as you talked about the friendly confines of the big board. >> i think all traders are basically cut from the same cloth. i fancy myself an ex-floor

monkey from chicago, who loves trading floors. it doesn't matter where they are. it's the bastian of capitalism. doesn't matter where it is. i was listening to bill gross yesterday during fed time. his comment was i think there's going to be more qe. his rationale was because every time central banks around the globe have pulled backs on the reins of some of these accommodating programs, these fire hose of liquidity, equities have come off. you think about what's he's saying, that doesn't sound like a stimulus to me. that sounds like a subsidy. sounds like the federal reserve is subsidizing the market. well, maybe it's only semantics for you but for all of those who aren't involved in equities, maybe they'll look at it different. next, february was a record month in so many ways. it was the fifth largest investment grade dollar denominated month at just under $100 billion. if you look at high grade, it

was the third best month ever at $44 billion. of course that is total global high grade denominated in dollars and each of those investment grade and high yield, the best february ever. what does that mean? i think it brings us to our next category. there's plenty of positive. just because the fed may be subsidizing equity doesn't mean there isn't positive issues with the economy going on. it's just what speed those issues are translated against what your speedometer says in terms of the dow or maybe even interest rates. but at the end of the day, corporations tapping the credit markets at these historically low yields can only be cronstrud as a positive. >> people saw bernanke as being a little less lovish and said the markets were correct in a post-qe era. that has not happened yet. why? >> let's keep it real simple. the treasury own as lot of position. that is off the market. that is in trading and supply

didn't come back around on the twist and buy much it have. there's a distortion in the signals of the treasury marketplace and i think many investors are going to hunker down, whether it's considered logical against dividend return or not. >> it's not about the flow -- >> i think so. if you take a company and pull so many shares out, it's going to affect trade. >> thank you, rick. >> the consumer protection bureau, the federal watch dog has taken on rewriting the rules for bank overdraft fees and helping borrowers who have struggled to get private student loans. we're joined by richard cordray for an exclusive interview. good to talk to you again this morning. good morning. >> good to be here. >> let's first talk about your agenda as you're there in nashville speaking to some

community bankers. couple months officially in the job. what are the one or two big accomplishments you want to make this year? >> we think that there's obviously a lot of work to do, and congress has told to us do a lot of work to clean up the mess in the financial markets that were created by the crisis. a lot of work to do in the mortgage market and putting nonbanks on par with banks in these consumer financial markets so we're not just regulating part of the economy as we were before. secondly, we continue our emphasis on our know before you owe effort, making prices and risks clear to consumers so they can make better informed decisions. we started that with the mortgage documents, with credit card agreements and now with student loan information. and, third, where we need to take on predatory practices to protect consumers, we will do that. >> how engrained do you think those predatory practices are at banks at this point? >> i think a lot of the predatory practices have been on the nonbank side but there's

some to go around. we're concerned about anyplace where the market is not working properly. so, for example, in the mortgage market and the runup to the crisis, a lot of loans were being made without careful assessment of the ability to repay. we have to be writing a rule and we're going to be writing a rule to try to clarify what that now will mean to improve the mortgage market. we also see areas where people don't have the ability to choose their provider. they can't vote with their feet and, therefore, they're more vulnerable than they would be otherwise. we see areas where institutions are telling investors one thing about the product they're producing and telling consumers quite different. that's always of concern to us as well. >> you're joining us on a heck of a week where we've got some stress test results and a slew of buybacks yesterday, a slew of dividend hikes. at the same time we're seeing the introduction of some new fees to consumers on their checking accounts. at least at a minimum on a pilot program level in certain areas of the country. how do you reconcile those two?

do you have a problem with the way some of these banks are returning money to shareholders? >> well, i don't have a money with banks returning money to shareholders. it's not part of our mission. if it's a sign of health, we're all in favor of that. what i would say is that we want to make sure that fees that are being imposed are very transparent and that there's competition in these markets. we don't like the notion and we saw it for years of the hidden back-end pricing where you signed up for something and then you learned only later that the price was different from what you thought it was or that the rates were going to be different from what you thought they were. that's something what we're very intent on cleaning up. and it should foster greater competition in these markets and that should be better for consumers. >> i know consumers, these may not be the kinds of consumers that you're looking out for but i can't not ask you about this op-ed in times today regarding goldman sachs and the way at least one former employee says they put profits above client

concerns. "i don't know of any illegal behavior but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client's goals? absolutely, every day in fact." your response to that? >> well, i think that that points to a concern, which is are financial institutions treating their customers, the consumers that we protect, in the short run the way they should be treating them with an eye to the long run. much of this transactional mentality is finding a way to harvest fees from people and that's not necessarily in the institution's long-run interest but it can make for short-term profits. those are issues that concern us, where we think the market is not working properly and we'll be looking closely at that wherever we see that going on. >> richard cordray, appreciate your time today. enjoy nashville. >> thank you. >> when we come back today, the goldman employee who did say

synar ra in style. we have some dish on why he did it and what he plans to do next. back in a moment. ♪ free fall americans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪

♪ ♪ it's something a lot of people may just think about doing but one goldman sachs employee actually did it, submitted his resignation via

the "new york times" op-ed page. what he had to say was not pretty. >> calling the bank as environment toxic and destructive, greg smith lays the blame at the ceo of the firm. "when the history books are written about goldman sachs, they may reflect blankfein put his interests first. not the case, says former executive director. cnbc's reporting find some current employees concur there's been a change in cult at the firm. "we disagree the views

expressed, which we don't think reflect the way we run our business. in our view, we will only be successful if our clients are successful." as for mr. smith, he designed cnbc's request for an interview. no surprise. >> i'm sure his phone has been ringing off the hook. i doubt he's picking up right now. >> thanks very much, mary thompson. when we come back this morning, everyone's favorite market maven. first, though, we were talking about the goldman piece, scathing op-ed saying the cult of goldman has changed, commenting some goldman managing director refer to their own clients as muppets. we have some exclusive video of them responding. take a listen. >> you know, they say if you can't say anything nice, don't say anything at all. i'm sorry, keep going. i don't know where that came

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♪ ♪ welcome back to "squawk on the street." markets mixed after a big rally of course yesterday. is it time to get off the sidelines? art joins me along with rick santelli. you called it the old timer's game. i didn't call it that. >> we've got several decades between us in the business. >> yes, yes. nobody is talking about shanghai and what happened overnight. >> i think that's a great sleeper story. he gave a speech and moch people picked up on his comments about the housing markets but shanghai got clocked i think because he raised the question of we've got to have reforms and avoid

slipping back in to the cultural revolution. and they have the leader of the communist party there who has been going around making noises about chairman mao and the chairman mao book and no market in the world is pricing in a power struggle in china. don't know if it's going to happen. it is a fearful thing but certainly it's something to be watched. >> you're not referring to the trade disputes the president laid out yesterday. you're talking about something internal within the country, correct. >> absolutely. a power struggle, they're getting ready for an orderly transfer of leadership. we hope it goes that way but it's such a powerful nation and has such a masterful influence on the whole world, commodities or whatever, if there were a sudden surprise over there, it could be disruptive to markets. you have to watch it. you don't have to act on it, but you do have to watch it. >> art, what i find fascinating, every ten years or so the master plan changes.

i give them credit for being strategic. that's what's given going on since november. they're slowing down a bit, turning the fire hose down a bit. 7.5% gdp sounds great but in the end do you think it's a coincidence that pulling back a bit, now you see the peripheral stories about these cultural issues. to me when you have 1.3 billion people, you need to move forward economically. if you take a pause, if you want to take one chicken a month away from a family, there may be issues there. that's going to be very difficult for the market to price in. >> as you know, every kingdom in china has fallen on food scarcity and food prices. your chicken analogy is well taken. >> ben bernanke says don't look at me when you see higher oil prices and developing third world countries, oh, my god, the price the flour and wheat. it's think central bankers have having is an influence on the

psyche of the chinese. >> i think so. they have made illusions to the fact of what they are importing now is being influenced by the united states and the fed. they're very sensitive to the criticism that, listen, you didn't get the economy moving but you raised the price of oil, you raised the price of wheat, you raised the price of copper. >> that's going to make those wto trade talks go so much better, don't you think? >> they'll be very friendly. >> art, thank you very much. good to see you. art cashin. straight ahead, what today's bond auction means. back after this break. [ woman ] my boyfriend and i were going on vacation,

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♪ a check on the markets about two hours into the trading day. looking a little more mixed as the s&p down 2 and nasdaq slightly negative. mi nike trading at levels not seen since the 1980s. as of this morng t themo now on twitter. so far ben bernanke has 1,731 followers. you can follow them at

at @federalreserve. what's happened to this bit of a fade here, bob? >> just a little bit. listen, we're still up on the day. it's been straight up. we've had one real down day the whole year and that was last tuesday on the concerns about china slowing down a little bit. i guess a lot of the e-mail this morning i'm getting is can we still keep moving up? economy is improving, bank dividends are there. look at the s&p 500. we passed the 11% up side for the year so far. look at that. straight up basically. this doesn't happen very often. you don't get an up 11% quarter very often. we actually got just about that the last quarter. this is pretty rare to get two back-to-back double-digit gains. usually what's going to happen here, at some point the market corrects. i just called s&p and talked to them about this. normally the market will drop 8% at some point in the career from where it was on december 31st. we closed at 1257 on december

31st. that would bring the market down to somewhere around 1156, if you drop 8%. that's a good 18% correction. that would be the average that we would have at some point in this year. so just bear in mind things do not go up in a straight line forever. normally at some point you're going to get some kind of correction here. the bond market selloff continues. everyone is watching the major exchange traded fund along the long-term bond. you can see the drop there. you can see the decline right here. this is for the year. of course we're at the lowest levels since going back to october. of course this represents a price situation here. the volume, rick, here titanic in the last two days. the volume is very heavy today. yesterday it was the highest levels in a very, very long time. the point is we're not at a tipping point yet. i agree with your observation but a lot of people are trading this in the last two days. the activity level suggests a

lot of itchy people eager to get out of the bond funds that are trapped there. when you get 6.9%, you are can't blame people for thinking there has to be better yield somebody else. i got a lot of calls about gold today. it's a very simple story. there's less fear out there. remember, the rally that we had in gold -- this is is the gold index here. the important thing is these are gold stocks here. this is a two-year chart. we've been moving down. we're at multi-year lows in gold stocks i'm talking about. gold being on the down side, it's just less fear. the huge runup -- put up gold here. i don't have the numbers here. we went from 1600 all the way up to 1900. yes, there's concerns about inflation but i think you're going to have to see real, real

inflation, real notable numbers in inflation to get gold moving back up there. the less fear is dominating gold. that's the story we've got right now. overall status quo today. but improving economy, china possibly soft landing. those are the major stories. >> thanks a lot, bob. we've got rick santelli here on set along with kelly evans who tweeted early this morning about what's happened to bonds. and this whole notion about who's following who, right? >> i think this is an interesting point. usually what we hear is the credit leads stocks. it's hard for people to focus on what's happening in the ten-year. they're always looking at the dow or s&p. usually people like rick are saying no one's paying attention to this move. we've seen almost the opposite thing happen lately. we've seen a big run up in stocks in the last two, three months. it's taken us until this week to see a similar move up in the ten-year. if you told me everything that was going to be resolved between

greece and econ, i would have second a ten-point base move and that's what we've gotten. >> if we put up some charts, everything but the two-year comps back to the same date. we haven't had yields this high on a closing basis since october 28th. i think the auctions are going to go tremendous live low with regard to 30z. they're going to be buying yields. but kelly's point is spot on. i do think you could say stocks in a way have led the way because i think that the fed has given them a bit of a sugar buzz. i'm very impressed that with the statement the way the fed is dealing with maybe no qe, it doesn't surprise me the dollar is stronger, doesn't surprised me interest rates are going higher, but i'm very impressed at this point that equities are holding in. >> the reflags afraid is what we've seen this week. that's what you want when you want to talk about a

strengthening economy. now that you have the ten-year back at 2235, what that's going to mean for mortgage rates -- >> nobody's getting a mortgage anyway. that's such a red herring. >> this is the problem. it like these governors on the recovery to some degree. the fed's trying for every marginal basis point it can get -- >> the fed ought to go to disney world. the economy is doing fine on its own. if it can't make it on its own, then it is what it is. maybe they'll come back and assess it. >> this is it the test. account economy stand on its own two legs? the fed says we're going to be more out of the picture. if you see wall street economist who is overwhelming expect quantitative easing to walk that back and say we don't anymore, that's when the reaction gets interesting. the onus is on data coming in to prove they're going to maintain the strengthening trend. it's going to get harder and harder. >> which makes you wonder how many pressure is on claims and

epi. how do you think tomorrow will look from a data standpoint? >> i think inflation will be warmer, the fed will dismiss it as temporary and people will fill up their tanks and think nasty thoughts about the word temporary. >> you don't think we'll look back at this week six months from now and say this is where the bond market took a turn? >> i don't think so. i do think we can get a bit higher but i think there's so many questions. who know what is they're going to be paying in taxes for 2013 for trying out loud. >> people hate to talk about comparisons between the u.s. and japan. you had huge tightening on the fiscal side. and there was this phrase, i'm going to butcher the pronunciation but dump japan is what global investors were saying and the economy went into recession. gdp retracted for the first time. we have to be aware of the

vulnerabilities here. >> do you agree with that it doesn't happens with mortgage rates because it so hard to get a mortgage anyway? >> there's a lot of proof in that. that's why we saw the let letter from ben bernanke to say this is what we want to happen. >> for a guy to get a fire hose to get a drop of water to a little geranium when the rest of the neighborhood is under a foot of water. >> it's not just the cost of money. it's also the availability. it certainly doesn't help. >> thanks for that mental image. that's very helpful. >> straight ahead, nike is hitting some new highs. it's got to be the shoes. ♪ they're playing basketball >> coming up -- >> it's got to be shoes. >> the shoes. >> the shoes! >> looks like you're right. nike releasing their new air jordan 2012 sneaker today. will this keep them trading

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against his company. wait till you hear his take on oil, the markets and the precious metal meltdown. plus is citigroup your best buy? a top analyst has your post stress step financial play. and with the s&p nearing 1,400 and the nasdaq at its highest since the tech bubble, see where our traders are putting their money. now back to carl on "squawk on the street." >> looking forward to that. starting today new air jordans go on sale for $223, this as nike hit new all time highs. is it time for investors to just buy it? sam, welcome back. the jordans are interesting but it sounds like the real up side will come from technology that we haven't actually laid our eyes on yet. >> they did a media day a few weeks ago here in new york and we got to see some new technology, the nike plus basketball and plus training off

of the lunar glide base, which was a huge business back in 2008, which has been a a $1.5 billion retail platform since then. the plus basketball and plus training business is new for the olympics and that will be -- you'll be able to measure your performance through bluetooth linking to your iphone, vertical jump and how hard you play. >> it will wireless transmit data from the shoe to a mobile device and from there you can share it on social media -- >> compare with friends. >> compare with athletes training regimens and things like that, right? >> the big volume comes out like if the pro basketball players want to play with the shoe, you'll be able to theoretically show their performance, how hard they're hustling, how high their vertical jump was live as they do it. nike said some of the college teams like it as a training tool to get the measurement of how

hard people are playing. i'm concerned about a basketball player that has a bad day, though. might not work so well. >> there's also something called the flynet which for a men's size 9 weighs 5 ounces? >> 5.6 ounces. eight mesh upper construction made like a sweater or sock. it's half a sock on to a very light outsole. theoretically it's only half now. down the road you'll be able to have a full wrap and do more things with it. because it doesn't require leather, it works for the niccy id where you'll be able to design your own colors and stuff and theoretically, this is way down the road, they'll be able to take a computer picture of your foot and make it custom to fit you better, too. it's not like a leather shoe. >> so your price target, $125, which you took on the 3rd of february. you say your models are still a little conservative, right? >> we know what we know.

we have a lot of big events coming up, the olympics this year with lots of new positive technology and coming up two years from now is the world cup in brazil, follow two years past there with the olympics in brazil again. brazil is one of the emerging markets. it's a huge opportunity and very really underdeveloped regardless of how fast it currently gro growing. >> you were talking about deckers and the cost of sheepskin. i assume these shoes are more expensive to make. how are margins impacted? how's pricing? >> we talked about it at the end of that discussion about adding innovation and being able to get price with innovation. and really with this innovation they could establish their prices or scarcity in the case of the jordan that's launching today. >> true, true. which leads to some social unrest. >> chaotic times. but what we're seeing is that the innovation and control of

distribution really manages the price. they have been raising prices but starting in the first quarter of 2013 we expect the cost to sort of level off and the price increases to take effect. we've talked to a lot of retailers, they're not seeing any resistance on this new product. we expect it to keep cooking. we expect -- we're looking for future order for the next six months or so, nike report next week, to be up in the mid teens on the currency neutral basis. considering it's the largest company out there of the companies i cover with two exception, the volume increase for fiscal 12, we modelling at over 3d billion, which is larger than the market cap of almost every company i cover. it's an incredible operation. >> it will be a game changing year. we'll see how the olympics affects it all. >> when we come back from a

break, larry kudlow making his first trip to post nine. he'll be here with santelli in just a moment.

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not one but two special guests on the set today. larry kudlow is making his debut here on post 9. pleasure to have you here. along with rick santelli. >> rick santorum had a very good night last night. i would take him seriously right now. i know the conventional wisdom, romney wins. i think there's a lot to that but santorum won two states we didn't think he'd win. he's a smart guy. he's hounding mitt romney on the health care message saying that romneycare is too much like obamacare. and mitt romney hasn't really answered that conclusively yet. that's an issue. and santorum's a tax cutter. i may not agree with everything but he's going to be tough and we're going to see it in illinois next year. >> couldn't close michigan,

couldn't close haiohio. are santorum and gingrich sticking around in case romney makes a fatal error? >> i think gingrich should get out, he's dead, it's his last gasp. it's a two-man race. i think santorum's victory last night really put him back in the game. he blue leaew leads in michigan ohio. the south is not romney's best spot. that's the core of the republican party. santorum is a force. that's all i'll say. >> meanwhile, talking about the ten-year today. >> 224ish. >> i love the ten-year rate rising. in my view bond rates are partly a reflection of the economy. it's a real interest rate effect. so the numbers coming out are better, the employment numbers are better, retail sales numbers were better. a lot of numbers were better.

if we're growing at 3% trend line, bonds ought to be about 3% if you ask me. and i also like the fbt that gold is falling and the dollar is rising. that spells productive investing. it all corroborates the stock market. before taxes go up next year, if that's what's going to happen on difficult depends -- >> not tax hikes. current tax structure. i am fed up to here saying the bush tax cuts. that was '03, right? this is 2012. that's the tax code, okay, once and for all! >> but that's a threat. i don't think you can be forever bullish. you have to wait and see what happens. we have debt bonds, spending bonds -- >> what do you make of 3% growth? that's the only question i have. >> i'm taking what we've got. the last few employment reports look like 3%. the fourth quarter was 3%. the first quarter will probably come in below 3% but there's a

lot a gdp accounting there. i was very impressed with yesterday's retail sales, i like industrial production. i'm going to stay 3% trend line, all right. we should be growing at 5. >> what was the deficit for february? >> deficit was very bad. >> $200 billion, right. >> yeah. by the way, tax receipts were a little soft. >> wish these two candidates would start talking about that more. >> well, i think they are. i think they're talking about energy and taxes and i think that's good. i think romney has a better budget control plan than santorum does, okay, and i think romney has a very good entitlement reform plan, particularly for medicare. it's a lot like paul ryan's plan. i like that. but i'm just saying nobody can predict whether these expected tax hikes that are in the president's budget -- take the dividends tax. we talked about it this morning. you didn't tell me you were going to triple the dividends tax rate. that is a tremendous burden on corporations and investors, it

is very hostile to the economy and it's very hostile to the stock market. you may have an effect where people are trying to beat the tax man. they're moving income and moving investment into 2012, which might boost that in order to pull it out in 2013 when it's all going to be taxed at a higher rate. that's the supply side effect. that could be very damaging to the economy. but short term, i have to say i like what i see. >> warren buffett's secretary will be much happier we're drags the top down. >> you think she'll be happier? you think buffett will be happier? i don't think anybody will be happier. the polls are showing nobody wants this. we need pro-growth tax reform and we have to stop the medicare debt bomb. paul ryan is a friend of mine. that's a paul ryan message. in some sense that's the most important futuristic thing out there. but i don't want to detract. there is no global armageddon,

okay? i think that's very important and therefore stocks are responding to that nicely. >> i think the economies of the world will bow about a 125 average for the next couple of years. >> 200 is the goal. >> 200's good, under 100 isn't good. >> it's been so long since bowling. i had to think about that. the u.s. may be 175. >> i think we can do a little bit better but we're still in a global environment. you can't swim outside the confines of the global pool. >> i really like the message of falling gold because when gold soars, that's not productive. >> on the world trade. >> it's an end of the world type trade. now with gold coming back down -- you know what i would like to see? i would like to see den bernanke appreciate the dollar and restore it to king dollar status. it about 80, 85 on the fed index, get it back to 100, get it back to 110. you'd see a drop in energy prices, in gasoline prices, in

food prices. i mean, money is cheap, i'm not denying that. money is too cheap. i want to see the dollar rise more. we'll see how the market trade it is. >> larry kudlow, rick santelli. keep those tweets coming. we're talking a lot about this goldman op-ed piece. if you were going to leave goldman, how would you top an op-ed in the "new york times"? back in a moment. [ tom ] we invented the turbine business right here in schenectady. without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants which take some form of energy, harness it, and turn it into more efficient electricity. [ ron ] when i was a kid i wanted to work with my hands, that was my thing. i really enjoy building turbines. it's nice to know that what you're building

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"squawk on the tweet" today, how would you top a "new york times" op-ed page if you were going to leave goldman sachs? jake tweets "get a spot speaking right before apple's next product release." >> return your stock options and donate it lobbying firms." great feed if you're not already following. close out the show here with rick santelli. talk about how important some of this inflation data is going to be tomorrow, going to be on friday. >> absolutely. tomorrow we're looking at headline up 0.5. i know it isn't going to be received ver